Converged technologies increasingly popular

20 Jul 2004

Two-thirds of companies are planning to shift applications across most or all of their business to converged networks within the next five years, a new global report by Nortel Networks and the Economist Intelligence Unit reveals.

Implementation has already begun for 55pc of firms, although most of these have deployed only within selected parts of the organisation so far. The survey defined convergence as the coming together of voice, data, video and other applications on a single broadband delivery platform based on internet protocol (IP).

Published in a white paper entitled “Deploy or Delay”, the survey found that the potential of voice-over IP (VoIP) to slash telephone costs is currently a key motivation for executives in pushing network convergence, as is the broader promise of reduced network management costs. The majority of executives surveyed (57pc) also hope converged networks will enable broader use of applications such as videoconferencing and collaboration software, which enables multimedia dialogue and document sharing between teams.

At the same time, only 13pc expect convergence to deliver significant productivity benefits in the medium term. Concerns remain, however, which continue to hold some companies back from deployment. Paramount among them is the cost of implementation, cited as a significant or very significant concern by 74pc of executives. Implementation and IP equipment costs are declining, but so are the costs of traditional services and equipment.

Executives also worry about the security implications of bringing all critical applications together on one network.

Last but not least among lingering concerns is the quality of voice transmission on IP networks. “The logic of converged networks is difficult to deny in the long run, but managers need to weigh the costs and benefits carefully, particularly in comparison with the existing technology,” says Daniel Franklin, editorial director of the Economist Intelligence Unit. He adds that converged networks – and the applications that run over them – are only as effective as the organisation and people that use them. “Management structures and work practices must be adapted to the technology to reap its maximum benefit.”

Convergence will deliver the greatest efficiencies once all applications are moved to the unified IP network, but the circumstances of many enterprises will dictate a gradual migration over time. “When planning, you’ve got to design a blueprint for convergence,” according to Malcolm Collins, president, Enterprise Networks, Nortel Networks. “It doesn’t need to be ubiquitous. You may only need to give it to 20pc of the workforce.”